We can sell 2 million 
in a year

Carvana has reported triple-digit revenue and unit volume growth in recent quarters — it is now operating in more than 80 markets. The company is still not making money, but “we don’t think it’s far away,” Garcia said.

“We think we’re going to reach profitability way before” hitting 2 million in annual vehicle sales, he said. He declined to specify a timeline for achieving either milestone.

Sameet Sinha, a senior equity analyst who covers Carvana for B. Riley FBR, said growing to 2 million units will indeed be a long chase. He called it a “hypothetical goal” and noted that Carvana has not assigned a timeframe to it. “Even 10 years, it seems, it would be tough to get there,” Sinha said.

The used-vehicle market is incredibly fragmented, but Sinha said that, all things constant, the growth needs to come from somewhere. “There’s only so much open territory [in which] you can take share from regular dealerships,” he said.

And the used-vehicle market is also different from many others. Most markets are defined by production and consumption, Garcia noted. Groceries, for example, are bought, consumed and then they’re gone. In the used-car market, customers use cars instead of consuming them. Used-vehicle sales are dependent on how often people buy.

Steve Dyer, co-president of Craig-Hallum, said that out of the market’s 40 million annual used-vehicle sales, selling 1 or 2 million does not seem like an impossible goal for Carvana. “To me the question is, can they do it profitably?” Dyer said. Carvana has not reported a net profit since going public in April 2017. Full-year 2018 results are set to be announced Feb. 27.

“The people that own the stock right now are obviously investing in growth,” Dyer said.

Investors largely expect Carvana to continue to lose money in 2019.

“But to me they have to make a considerable move toward profitability in the next year,” Dyer said.